Single-step Income Statement

The single-step income statement is straight-forward. First, total revenues, then subtract expenses, and, finally, show Net Income.

Concept: Single-step Income Statement

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Single-step Income Statement Additional Practice Problems

ABC Company began operations on August 1, 2009 and entered into the following transactions during 2009:

1. On August 1, ABC Company sold common stock to owners in the amount of $200,000 and borrowed $100,000 from the local bank on a 10-month, 12% note payable.

2. On September 1, ABC Company purchased a piece of equipment costing $80,000 by paying $20,000 in cash and agreeing to pay the remainder within six months. The equipment was assigned a 5-year life and a $5,000 residual value.

3. On October 1, ABC Company received $50,000 cash from a customer for services to be performed over the next 10 months.

4. On November 1, ABC Company paid $12,000 cash for a one-year insurance policy.

5. On December 1, ABC Company paid $10,000 of the amount owed for the equipment purchased on September 1.

Calculate the amount of  net income that ABC Company would report in its 2009 income statement after all the above transactions are recorded and all necessary adjusting entries are made at December 31, 2009.

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The following information was taken from the accounting records of ABC Company for the year ended December 31, 2006:

Calculate the balance in the advertising expense account at December 31, 2006.

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A net loss results from having more liabilities than revenues.

a. True

b. False

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Shamrock, Crop. has the following information on its Income Statement at year end. Calculate its Net Income(Loss).

Sales $200,000
Cost of Sales $50,000
Payroll Expense $25,000
Operating Expense $100,000

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A single-step income statement

a. Excludes non-operating revenues and expenses

b. Includes other comprehensive income

c. Includes Gross Margin

d. Includes gains as revenue and losses as expenses

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Net Income is:

a. Revenue – expenses – dividends

b. Revenue – expenses + dividends

c. Assets – liabilities

d. Revenue - expenses

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Johnny’s Car Repair Shop started the year with total assets of $60,000 and total liabilities of $40,000. During the year the business recorded $100,000 in car repair revenues, $55,000 in expenses, and dividends of $10,000.

The net income reported by Johnny’s Car Repair Shop for the year was

a. $35,000.

b. $45,000.

c. $20,000.

d. $90,000.

e. none of the options listed

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